November GST Collection Rises Marginally to Rs 1.70 Lakh Crore as Consumption Improves Despite Tax Cuts
New Delhi, December 1: Goods and Services Tax (GST) collection in November recorded a marginal year-on-year increase of 0.7 percent, reaching Rs 1.70 lakh crore, which marks the lowest level in the past year. Data released on Monday indicates that consumption continues to improve despite reductions in tax rates on a majority of products and services. The government had implemented a new structure with only two GST rates of five percent and 18 percent effective from September 22, alongside a special rate of 40 percent fixed for luxury and harmful goods.
While tax rate cuts and robust festive purchasing had boosted GST collections in October, the figures for November reflect a sustained rise in consumption even after the conclusion of the festive season. As per agency report, the total GST collection for November, excluding cess, stood at Rs 1.70 lakh crore, showing a slight increase compared to Rs 1.69 lakh crore collected in the same month last year. This figure is significantly lower than the Rs 1.96 lakh crore collected in October, although the October data included compensation cess. When cess is included, the total tax collection for November was Rs 1.74 lakh crore, which is 4.22 percent lower than the Rs 1.82 lakh crore recorded in November 2024.
Under the new GST arrangement, compensation cess is applicable only to tobacco and pan masala products. Government sources clarified that cess was not included while preparing the November GST collection figures. A source noted that the value of taxable supplies in GST returns filed by companies has increased on an annual basis, reflecting an optimistic trend. The source added that increased consumption demonstrates the positive impact of GST cuts, expressing confidence that this tax reform will be sustainable and generate a multiplier effect on the economy in the future.
In terms of specific revenue components, domestic revenue declined by 2.3 percent to Rs 1.24 lakh crore, while revenue from imports increased by 10.2 percent to reach Rs 45,976 crore. Refunds during this period stood at Rs 18,196 crore, registering a decline of four percent. After adjusting for refunds, the net GST collection stood at Rs 1.52 lakh crore, which is 1.3 percent higher on a year-on-year basis.
Aditi Nayar, Chief Economist at rating agency ICRA, suggested that the increase in consumption could neutralize the impact of rate cuts on most products. She observed that while tax collection in the current financial year might fall short of budget estimates, the government is likely to receive higher than expected non-tax revenue to offset part of this deficit. M.S. Mani, a partner at Deloitte India, pointed out the wide disparity in tax collection across various states, emphasizing the need for a root-cause analysis of different regions to understand the reasons for the decline and implement appropriate policy measures. Tax expert Vivek Jalan noted that the collection appears weak because consumption did not rise enough to counter the reduced tax rates and increased refunds, highlighting the need to boost consumption in the remaining months of the financial year.
